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Banking & Finance

2017 budget deficit set at 3.5% of GDP

Released at: 07:30, 14/11/2016

2017 budget deficit set at 3.5% of GDP

Photo: Duc Anh

NA approves ceiling and also an increase to public sector minimum wages of 7.4% from July 2017.

by Duy Anh

The budget deficit ceiling has been set at 3.5 per cent of GDP for 2017, equal to VND178.3 billion ($8 billion), with a majority of National Assembly (NA) delegates voting in favor of the associated resolution on November 11.

Total budget collections are to be VND1,212 trillion ($54.2 billion) and total budget expenditure VND1,390 trillion ($62.2 billion), for a budget deficit of VND178.3 trillion ($8 billion), or 3.5 per cent of GDP.

The deficit target is quite low, as in recent years the 5 per cent GDP ceiling has been retained but the actual results in 2014 and 2015 were 6.33 per cent and 6.11 per cent, respectively.

In July the first session of NA XIV retained the budget deficit target for this year at 5 per cent GDP. The deficit in the first ten months of this year was estimated at VND159.5 trillion ($7.14 billion), the latest Ministry of Finance figures reveal, representing 113.3 per cent of the newly-set target for 2017.

Next year the State budget deficit is to be VND172.3 trillion ($7.7 billion), or 3.38 per cent of GDP, and the local government budget deficit is to be VND6 trillion ($268.4 million), equal to 0.12 per cent of GDP, under the newly-passed resolution.

Total State budget loans, including loans to cover the budget deficit and loan repayments, are to be VND340 trillion ($15.2 billion) next year.

The NA also approved a government proposal to increase the minimum wage in the public sector from the current VND1.21 million ($54) per month to VND1.3 million ($58), from July 2017.

This is the second annual increase in a row for the sector, which has around 2.8 million employees. In May this year the minimum wage increased 5 per cent; the first rise in three years.

The minimum monthly salary for public employees is calculated by multiplying the basic level with a coefficient determined by qualifications and experience. The coefficient for a new sub district-level public servant with a Bachelor’s degree, for example, is 2.34.

Mr. Nguyen Duc Hai, Chairman of the NA’s Finance and Budgetary Committee, has said the new pay raise is reasonable considering the higher cost of living, but the government needs to scale down the public sector workforce to reduce pressure on the State budget.

At a conference in October, economists blamed low wages in the public sector for the increasing occurrence of corruption. Last year Vietnam ranked 112th out of 168 countries in Transparency International’s Corruption Perceptions Index.

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